Last week the third quarter GDP showed the economy growing at a 3.5 annual pace. This broke the pace of 4 negative quarters in a row, and prompted "we are coming out of recession" talk.
The reason the GDP grew, however, should be noted that it came from GOVERNMENT intervention, not from growth in the private sector. We have to understand the facts:
1. Almost 1% of this growth came from motor vehicle production, around the cash for clunkers intervention
2. These buyers won't be there in the future, so the figure is already inaccurate.
3. Spending in research and development and product design are never figured into GDP, so if these are being cut (and they are) we are not finding new ways to produce product that we can manufacture.
So, short term we appear to have come out of the downleg, and intervention did help this. Sadly without it the bankers bets would have destroyed us all; sadder still the bankers are betting again, and no one is stopping it.
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Roubini, my favorite economist, believes we are always "creating bubbles from stocks to gold to commodities". As there are few USD bulls right now it's likely as a contrarian viewer to see that the USD could stage a serious rally, and this could effectively stop the "shorting of the USD" that the bond buyers are creating. If the USD rebounds dramatically this means the world markets will be effected negatively.
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Numerically I see us topping by early January , 2010, when more of the Fibonnacci retracement (10,700 area) could hold, and the numerical significane that numbers is 0 have. As 2010 approaches I believe a combination of what we have "believe" (that it is over), what we have "created" (a false dollar), what we have "not done" (created product to sell), could catch up with us in early 2010 and force a declining optimism, and another crash, and another stimulus infusion.
